North Korean leader Kim Jong Un warns of ‘shocking’ action, new strategic weapon

North Korea’s leader Kim Jong Un before a meeting with US President Donald Trump on the south side of the Military Demarcation Line that divides North and South Korea, in the Joint Security Area (JSA) of Panmunjom in the Demilitarized zone (DMZ) on June 30, 2019.

BRENDAN SMIALOWSKI / AFP / Getty Images

North Korean leader Kim Jong Un said Wednesday he will continue developing his country’s nuclear deterrent and introduce a new strategic weapon in the near future, according to the North’s state-run media KCNA.

Kim’s remarks came after the United States missed a year-end deadline for a restart of denuclearization talks.

The White House and the Pentagon did not immediately respond to CNBC’s request for comment.

U.S. Secretary of State Mike Pompeo said he hoped North Korea would “choose peace.”

“So, seeing that reporting publicly, it remains the case that we hope that Chairman Kim will take a different course,” Pompeo told Fox News in an interview. “We’re hopeful that … Chairman Kim will make the right decision – he’ll choose peace and prosperity over conflict and war.”

Kim convened a rare four-day meeting of the ruling Workers’ Party’s policy-making committee since Saturday as the United States had not responded to his repeated calls for concessions to reopen negotiations, dismissing the deadline as artificial.

Kim had warned he might have to seek a “new path” if Washington fails to meet his expectations. U.S. military commanders said Pyongyang’s actions could include the testing of an intercontinental ballistic missile (ICBM), which it has halted since 2017, alongside nuclear warhead tests.

There were no grounds for North Korea to be bound any longer by the self-declared nuclear and ICBM test moratorium as the United States continued joint military drills with South Korea, adopted cutting-edge weapons and imposed sanctions while making “gangster-like demands”, Kim said, according to KCNA.

He pledged to further develop North Korea’s nuclear deterrent but left the door open for dialogue, saying the “scope and depth” of that deterrent will be “properly coordinated depending on” the attitude of the United States.

“The world will witness a new strategic weapon to be possessed by the DPRK in the near future,” Kim said, using the acronym for North Korea’s official name, the Democratic People’s Republic of Korea.

“We will reliably put on constant alert the powerful nuclear deterrent capable of containing the nuclear threats from the U.S. and guaranteeing our long-term security.”

The announcement comes a week after the world braced for a “Christmas gift” that Kim promised to send to the United States. Trump downplayed Kim’s cryptic message and said that rather than a missile test, “maybe it’s a nice present.”

“Maybe it’s a present where he sends me a beautiful vase as opposed to a missile test,” Trump said. “I may get a vase. I may get a nice present from him. You don’t know. You never know.”

Under third-generation North Korean leader Kim Jong Un, the reclusive state has conducted its most powerful nuclear test, launched its first-ever intercontinental ballistic missile and threatened to send missiles into the waters near Guam.

Since 2011, Kim has launched more than 100 missiles and conducted four nuclear weapons tests, which is more than what his father, Kim Jong Il, and grandfather, Kim Il Sung, launched over a period of 27 years.

Earlier this month, North Korean state media said that a “very important” test was carried out at a rocket testing ground. Trump responded to the report by tweeting that Kim risks losing “everything” if he does not take steps to denuclearize.

“Kim Jong Un is too smart and has far too much to lose, everything actually, if he acts in a hostile way. He signed a strong Denuclearization Agreement with me in Singapore,” Trump wrote on Twitter, referring to his first summit with Kim in 2018.

North Korea’s ambassador to the United Nations said on the heels of the test that denuclearization was off the negotiating table with the U.S. and lengthy talks with Washington were no longer needed.

— Reuters contributed to this report.

The company has become ‘unrecognizable’

When Google co-founders Larry Page and President Sergey Brin stepped down from their roles as CEO and president of Google holding company Alphabet earlier this month, it marked the end of an era. While it’s unclear what prompted the two to leave their formal management positions, longtime employees, many of whom also left the company this year, described to CNBC a massive cultural shift that percolated throughout 2019.

They cited changes to Google’s all-hands meetings, human resources processes and transparency from management.

Alphabet CEO Sundar Pichai in October admitted the company’s challenge in scaling the trust of its own workforce which numbers more than 100,000 people. More recently, Lazlo Bock, former director of human resources for Google, told Bloomberg that he thinks Alphabet is “a different company than it used to be” but that “not everyone’s gotten the memo.”

The change has been noticed by some on the outside, too. “What the hell is going on over there?” tweeted Andreessen Horowitz partner Martin Casado over the summer. “The brain drain at Google right now is astonishing.”

Google declined to comment.

A shift in transparency

Workers told CNBC that 2018 was a pivotal point in the company’s shift away from upfront communication. That was when news of Project Dragonfly, a secret Google plan to develop a censored search engine for possible rollout in China, first broke in The Intercept. Internally, the existence of the project had been kept on a need-to-know basis.

The company later canceled Project Dragonfly after employees expressed concern over the secrecy of the project. Some workers left the company altogether.

“There’s no way a few years before, they would have had a secret project with these kinds of ethical concerns,” said Raph Levien, a former level 6 engineer who left Google after 11 years. “It crossed the line and felt misleading. It definitely felt like this was Google changing.”

Though he wasn’t on the project, Levien said the company’s effort to reenter China and its secrecy around the project inspired his decision to leave.

“It was like, what are we actually building here? Are we building a magical encyclopedia or are we building a surveillance network, which has immense potential to be misused?” Levien said.

Robert Lord, a software engineer, said the company has shifted away from a culture of free and open thinking he thought he signed onto. He departed the company after less than a year, before the project he was working on had ended.

“I didn’t have ethical concerns with specific work, but it was more about supporting the company as a whole,” Lord told CNBC. “As a programmer, you have a lot of choice and I don’t blame people for staying, but I felt because I had a choice, I had a responsibility to choose to leave.”

One turning point for Lord and others was when news broke that the company had paid former executives, including Android co-founder Andy Rubin, golden parachutes even after finding sexual misconduct allegations to be credible. Rubin denied any wrongdoing, but that didn’t stop employees from staging a massive companywide walkout last fall.

“When the payouts happened, that definitely felt like a punch in the gut,” Lord said. “I did feel like I was going to work at a big evil corporation.”

Nine-year veteran Colin McMillen told CNBC that he left Google early this year without another job because he felt couldn’t be a part of the organization anymore, citing Dragonfly, transparency and Google leadership’s “poor handling” of crises over the last year.

Employees last month staged a rally amid the suspension of employees who were later fired. That rally’s purpose was to “save Google’s open culture,” according to the event details. Protesters demanded transparency on policies that Google said led to their decision to fire four employees. In December, the National Labor Relations Board began investigating the company for the firings.

“Google is built on trust,” said Zora Tung, an engineer at Google who spoke at the rally. “If the company wants to succeed, it needs to regain that trust through transparency and accountability.”

Becoming bigger

Long-tenured Google employees also said the company culture changed as it scaled to more than 100,000 workers, many of whom are contractors instead of full-time employees.

Graham Neray is CEO of a New York start-up called Oso. He told CNBC that longtime Googlers who interviewed for roles at Oso said the company had become “too big” and bureaucratic to make a difference for workers. Major organizational changes and uncertainty in some divisions like the Google Cloud Platform were also mentioned by candidates, he said.

Bureaucracy was the reason for a former engineering director who left the company in August after seven years. This engineer, who asked to remain anonymous because he’s not authorized to talk about his time there, said upper management began placing extra emphasis on head count in recent years. Because of that, the company has become reluctant to eliminate weaker team members, which affected his and others’ organizations, he said.

Some employees said they were recruited on the notion they’d be able to change the world with a free and open-thinking channel to management and products. But over the last year, those ideals no longer seem tenable, workers said.

“Executives really engaged with the debate and the dialogue which I don’t think you see now,” said Claire Stapleton, a 12-year veteran who spearheaded employee-led policy change movements, including the walkout, then left the company last summer, claiming retaliation by company leaders.

For instance, less than two years ago, co-founder Brin stood beside the ranks at the bustling San Francisco International Airport to protest President Donald Trump’s travel ban. It was a bold statement. It showed Google wasn’t afraid to stand up for its ideals and its workers.

Sergey Brin, president of Alphabet and co-founder of Google, joins protestors at San Francisco International Airport.

Courtesy: Vassil Mladjov

But the separation between workers and leaders over the last year has grown, and some workers said it’s not what the founders had in mind.

When Page became CEO in 2011, he became “obsessed” with reading about why companies fail from being too big and sluggish, Stapleton said. “It’s sort of sad that a lot of the things he was afraid would happen, actually happened.”

Stapleton, who held a number of roles close to the founders, recalled Page walking around offices with a chunk of metal that he said was from his grandfather’s auto plant in Michigan. It supposedly symbolized a point in time when auto workers felt like they needed to protect themselves against management. Page showed it as an example of something he hoped would never happen to Google.

“He always said how much Google needs to be upfront and progressive in how it handles people and processes and HR,” Stapelton recalled. “He had such an optimistic view of technology and how Google could really transform how people live and free up humanity to pursue the arts.”

Changes in HR

In January, the company rolled out an overhaul to how its human resources department responds to complaints, according to McMillen, Stapleton and two other employees who quit this year, Liz Fong-Jones and Chelsey Glasson. For veterans, it signified yet another major change at the company that distanced workers from accessible power.

Instead of each person reporting to their own human resources contact in their organization and location, there’s essentially a ticketing queue, workers said. That’s become a problem for some who feel their needs are now outsourced to people who don’t have prior knowledge or understanding of the situation.

“I still knew the HR Business Partners personally and reached out individually to them,” said Fong-Jones, a site reliability engineer who left the company in 2019 after 11 years, citing ethics concerns. “I worry a lot more about more junior Googlers and people newer to the company who wouldn’t know how to bypass the system.”

Stapleton said when she made a request to HR earlier this year, she was routed to a call center in Chicago, where she spoke to a young gentleman who had recently graduated college. Responding to a concern she had with a manager, he gave her bad advice to take her manager out to drinks, she said.

Glasson, a research lead at Google for more than five years, left this year and wrote in a memo that her manager made discriminatory remarks about pregnant women. When she reported it to human resources, the department said it would investigate.

However, she told CNBC, the company did not investigate until after she hired an attorney, and never interviewed her for the investigation.

“It’s been interesting for me to watch Google make statements such as, ‘We thoroughly investigate all instances of discrimination, harassment and retaliation,'” she told CNBC. “From my experience this is not at all true … it was only after I hired an attorney that Google investigated a small portion of my situation.”

Correction: Chelsey Glasson told CNBC that Google did not investigate her case until after she hired an attorney, and never interviewed her.

WATCH: Why Alphabet’s investigating executives over inappropriate relationships

US Army bans TikTok following guidance from the Pentagon

A US Marine uses his smartphone to take pictures during a joint military drill between South Korea and US Marines at a fire training field in the southeastern port of Pohang.

Jung Yeon-Je | AFP | Getty Images

The U.S. Army, following the lead of the U.S. Navy and guidance from the Pentagon, has banned the short form video app TikTok from all government-owned phones, according to a U.S. Army spokeswoman.

On Dec. 16, in a cyber awareness message, the Defense Information Systems Agency recommended that all employees of the Defense Department not use the Chinese-owned app.

“It is considered a cyber threat,” Army spokeswoman Lt. Col. Robin Ochoa told Military.com. “We do not allow it on government phones.”

In an email to NBC News, Army Public Affairs Lt. Col. Crystal X. Boring said the Army is following the Office of the Secretary of Defense’s guidance that TikTok is a potential security risk.

“The message directs appropriate action for employees to take in order to safeguard their personal information. The guidance is to be wary of applications you download, monitor your phones for unusual and unsolicited texts etc. and delete them immediately and uninstall TikTok to circumvent any exposure of personal information,” Boring said.

A spokesperson for TikTok also did not immediately respond to a request for comment.

The initial guidance from the Pentagon to discontinue use of the app was part of an effort to “address existing and emerging threats,” Pentagon spokesman Lieutenant Colonel Uriah Orland said in a statement, according to Reuters.

The app, owned by Chinese-base tech company ByteDance, came under scrutiny in October when Sens. Chuck Schumer of New York, the Democratic minority leader, and Tom Cotton, an Arkansas Republican, sent a letter to the acting Director of National Intelligence Joseph Maguire asking him to assess TikTok and other China-based companies for potential security risks.

In November, it was reported that a security risk assessment of TikTok by the U.S. government had been opened.

The Military had been using TikTok as a recruitment tool and as a way to reach young people, but began dissuading soldiers from using the app in mid-December, according to Military.com.

Military personnel are allowed to use the app on their personal devices, but the Defense Department has warned that those using the app in their private lives still exercise caution.

It was not immediately clear if the U.S. Marine Corps or the U.S. Air Force had also banned the app.

CDC says 55 people have died of vaping lung illness across 27 states

A woman vapes with an electronic cigarette device.

John Keeble | Getty Images

A deadly vaping lung illness has now taken the lives of 55 people across 27 states, the Centers for Disease Control and Prevention said Tuesday.

The total number of people hospitalized with the illness so far this year now stands at 2,561 with 55 new cases diagnosed and one new fatality over 10 days, according to CDC data compiled through Friday. Patients have been found in all 50 states as well as the District of Columbia, Puerto Rico and the Virgin Islands, according to the CDC.

The CDC is tentatively calling the illness EVALI, short for e-cigarette, or vaping, product use associated lung injury. Public health officials say the main culprit is vitamin E acetate, a sticky compound found in some THC vaping products.

The CDC said in early November it was narrowing in on the substance as a “potential toxin of concern” after it was detected in 29 out of 29 lung tissue samples tested by public health officials. THC, the active ingredient in marijuana, was found in 23 of the 29 samples tested, officials said. Nicotine was detected in 16 samples, which came from 10 different states across the country.

The CDC has recommended that consumers stop vaping, particularly THC and especially anything bought off the street. Until the relationship of vitamin E acetate and lung health is better understood, it is important that the compound not be added to e-cigarette or vaping products, the CDC said.

Report sheds light on Ukraine aid freeze at center of Trump’s impeachment

John Bolton, national security adviser, from left, Mick Mulvaney, acting White House chief of staff, and Mike Pompeo, U.S. secretary of state, listen as U.S. President Donald Trump, not pictured, speaks to members of the media in the Oval Office of the White House in Washington, D.C.

Alex Wroblewski | Bloomberg | Getty Images

A new report paints the most detailed picture yet of the internal strife surrounding the White House’s freeze on hundreds of millions of dollars in military aid to Ukraine, which is at the center of President Donald Trump’s impeachment in Congress.

The report from The New York Times, constructed from interviews with dozens of officials and previously unreleased documents, sheds new light on the key figures in the Trump administration’s dealings with Kyiv.

It also probes Trump’s own insistence that the congressionally mandated military aid package be withheld as he sought investigations into Vice President Joe Biden and his son Hunter, who worked on the board of a Ukrainian energy company while his father served under President Barack Obama.

On Tuesday morning, Trump repeated his accusations against the Bidens and his criticism of the impeachment process.

The president’s latest tweet is sure to add some more fuel to the impeachment war: a clash between Republicans and Democrats over whether the rules of Trump’s eventual trial in the Senate should allow witnesses to be heard or questioned.

Trump was impeached in the House on articles of abuse of power and obstruction of Congress related to his dealings with Ukraine. While the aid was being withheld, Trump asked Ukrainian President Volodymyr Zelenskiy to “look into” allegations against former Vice President Joe Biden and his son Hunter, as well as a conspiracy theory about Ukraine meddling in the 2016 U.S. election. Trump has denied any wrongdoing.

The aid was eventually released in September, after Trump learned of a whistleblower complaint about the call, which spurred Democrats to launch an impeachment inquiry. The White House has refused to cooperate with House Democrats’ investigation.

No Senate Republicans have said they support Trump’s impeachment. It’s widely predicted that the GOP-majority chamber will not reach the two-thirds vote threshold required to convict Trump and remove him from office.

But the new details could provide leverage to the Democratic leaders who are pushing Senate Majority Leader Mitch McConnell, R-Ky., to accept their demands for the trial’s rules.

Here are some new details from the Times’ report:

‘Expect Congress to become unhinged’

Officials in the White House budget office first learned of the push to withhold nearly $400 million in military aid to Ukraine in mid-June. That’s when White House aide Robert Blair told acting White House budget director Russell Vought “we need to hold it up,” officials briefed about the conversation told the Times.

The newspaper reported that more than a week later, acting White House chief of staff Mick Mulvaney emailed Blair: “Did we ever find out about the money for Ukraine and whether we can hold it back?”

The aide responded that it may be possible, but “expect Congress to become unhinged,” according to the Times.

Both Mulvaney and Blair have been requested by Senate Minority Leader Chuck Schumer, D-N.Y., to testify during Trump’s impeachment trial in the Senate. McConnell rejected Schumer’s request — but he later said that the GOP hasn’t ruled out the possibility of hearing witness testimony in the trial.

Top officials tried to convince Trump to release the aid

The Times reported that in late August, Trump was confronted in the Oval Office by Defense Secretary Mark Esper, Secretary of State Mike Pompeo and then-national security advisor John Bolton.

John Bolton, national security advisor, right, and Mike Pompeo, U.S. secretary of state, listen during a meeting between U.S. President Donald Trump and Justin Trudeau, Canada’s prime minister, not pictured, in the Oval Office of the White House in Washington, D.C., U.S., on Thursday, June 20, 2019.

Jim Lo Scalzo | Bloomberg | Getty Images

Each of the top administration officials tried to convince Trump to hand the aid package over to Ukraine.

But Trump said in response that he believed Ukraine was a corrupt country, and added that he did not believe the newly elected Zelenskiy’s promises of reform, according to the Times.

“We are pissing away our money,” Trump reportedly said.

Key official’s role in the aid freeze caused friction

The core group of officials working to carry out the aid freeze had close ties to Mulvaney, the Times reported. Among them was Michael Duffey, a budget office appointee.

Duffey had been pressed by Mark Sandy, another budget office official, about why Trump had decided to put a hold on the aid package, according to the Times. No clear explanation had been given at that time.

Acting White House Chief of Staff Mick Mulvaney takes addresses reporters during a news briefing at the White House in Washington, October 17, 2019.

Leah Millis | Reuters

Some of the money intended for Ukraine had been allocated by the Pentagon. Unlike the State Department, which controlled a separate chunk of the aid, the Pentagon had already notified lawmakers of its intent to spend the money.

So Duffey suggested that in order to allow the freeze to take place, Sandy should mention the withholding of that chunk of money in a footnote attached to a different budget document, the Times reported.

Sandy testified that he was concerned about that move and sought guidance from budget office lawyers.

Shortly after Trump’s call with Zelenskiy, Duffey sent an email to the Pentagon directing that the aid money should not be spent.

“Given the sensitive nature of the request, I appreciate your keeping that information closely held to those who need to know to execute the direction,” Duffey said in an email made public earlier this month.

Duffey failed to appear for a scheduled deposition as part of the House impeachment inquiry in early November. Schumer had also demanded that Duffey testify as part of the Senate trial.

Read the full report from The New York Times.

US consumer confidence December 2019

People shopping at a Costco store

Scott McIntyre | Bloomberg | Getty Images

U.S. consumer confidence dipped slightly in December, according to data released by The Conference Board on Tuesday. The metric came in at 126.5 for the month, down from 126.8 in November. Economists polled by Reuters expected a reading of 128.2 for December.

The Conference Board also announced an upward revision to November’s reading.

“Consumer confidence declined marginally in December, following a slight improvement in November,” said Lynn Franco, director of economic indicators at The Conference Board, in the release. “While consumers’ assessment of current conditions improved, their expectations declined, driven primarily by a softening in their short-term outlook regarding jobs and financial prospects. While the economy hasn’t shown signs of further weakening, there is little to suggest that growth, and in particular consumer spending, will gain momentum in early 2020.”

The percentage of consumers judging that business conditions are “good” remained virtually unchanged at 38.7%, while those claiming that conditions were “bad” decreased to 11.1% from 13.6%. Perceptions of the labor market were mixed, however, as the percentage of people saying jobs were “plentiful” and the percentage saying jobs were “hard to get” both slightly increased to 47% and 13.1%, respectively.

Consumers’ outlook on the job market also slightly soured, as the proportion of consumers expecting fewer jobs and lower income also edged higher.

On business conditions as a whole, consumers maintained an overall positive outlook, according to the survey conducted by Nielsen.

Correction: This story has been updated to reflect that consumer confidence dipped in December but rose slightly in November, based on revised data from The Conference Board.

The stock market boomed in 2019. Here’s how it happened

Traders react after the closing bell on the floor of the New York Stock Exchange (NYSE).

Michael Nagle | Bloomberg | Getty Images

It was a year that began with investors courting a bear market and ended with the biggest gains from stocks since 2013.

Twelve months ago, few could have imagined the S&P 500 delivering a gain of more than 28% in 2019. It was a performance that flirted with the 31% gain of 1997, and one that came very close to topping the 29.6% return of 2013.

The tech-heavy Nasdaq did even better, posting a gain of nearly 35% as money flowed to the tech giants, cementing Apple and Microsoft’s position as trillion-dollar companies. The Dow Jones Industrial Average was up about 22%.

It was a year filled with fears that were never realized: a global economic slowdown, disruptive trade wars and potential missteps from Federal Reserve policy. The year also revealed an unforeseen boom in the tech sector that drove the major stock indexes ever higher.

Starting from a low

One of the key’s to the market’s 2019 success was starting from a low base.

A steep sell-off in December 2018 left the S&P 500 just 0.2% from officially hitting a bear market, defined as a 20% decline from its closing peak.

The S&P 500 ended 2018 with a loss of more than 6%, closing at 2,485.74 on Dec. 31, 2018. In the final hours of trading in 2019, it’s trading around 3,220.

For perspective, the S&P is finishing 2019 about 10% above 2018’s high of roughly 2,900, which is close to the average return for the S&P 500 over 90 years of 9.8%.

Help from the Fed

The Marriner S. Eccles Federal Reserve Board Building in Washington, D.C.

Jabin Botsford | The Washington Post | Getty Images

Much of the stock market’s gains in 2019 can be attributed to a dramatic policy shift at the Federal Reserve.

The Fed raised rates four times in 2018, including a December 2018 hike that took its key rate to 2.5 percent.

It was a different story in 2019, when after a change of heart the Fed lowered rates three times. Falling interest rates sent investors on a quest for yield, forcing more money into stocks expected to appreciate, pay dividends or both.

The Fed’s key rate is now back to a range of 1.50% to 1.75%. Additionally, the Fed has said it expects to leave rates unchanged for 2020, giving investors clarity on top of what remain historically low rates.

Trade tiffs

President Donald Trump meets with China’s President Xi Jinping at the start of their bilateral meeting at the G20 leaders summit in Osaka, Japan, June 29, 2019.

Kevin Lemarque | Reuters

Fed Chairman Jerome Powell described the central bank’s moves as “insurance” rate cuts. The Fed wanted to ensure a slowing global economy didn’t drag down the U.S.

One of the biggest uncertainties for global economic growth was President Donald Trump’s trade negotiations with China as well as the re-crafting of the North American Free Trade Agreement with Canada and Mexico.

Indeed, trade war headlines dominated the financial news throughout most of the year. Trump’s tariffs and threats of more tariffs often sent indexes frightfully lower. Then his pronouncements, usually by tweet, that deals were coming together, would send markets back even higher.

Over the course of the year, however, the trade war had only transient effects on the stock market.

As the year came to a close, the House passed the United States-Mexico-Canada Agreement, which is Trump’s replacement for NAFTA, and the Senate is expected to pass it soon. Also, the Trump administration has come to a phase one trade agreement with China.

When U.S. and China officials sign the deal in the coming weeks, it hardly means an end to what are sure to be difficult negotiations, but the initial agreement has marked a pause in trade war escalation, and that has sharply boosted markets.

Global economic slowdown

A tug boat passes the the CSCL Bohai Sea cargo ship docked at the Port of Oakland in Oakland, California.

David Paul Morris | Bloomberg | Getty Images

Throughout 2019, investors fretted a slowing global economy. Some of those fears stemmed from disruptive trade wars and tariffs, another was the U.K.’s plans to depart from the European Union, often called Brexit, and fears of voters around the world shifting to the far left.

The International Monetary Fund has recently downgraded its 2019 estimate for global economic growth to 3%, the lowest since the financial crisis.

But as the year came to a close, it appeared the U.K. would more likely achieve a negotiated exit from the EU versus a hard one and trade tensions eased with the phase one deal between the U.S. and China.

And some economists are expressing hopes that the global economic slowdown is bottoming.

Fueling the economy

Investors monitor a screen displaying stock information at the Saudi Stock Exchange (Tadawul) following the debut of Saudi Aramco’s initial public offering (IPO) on the Riyadh’s stock market, in Riyadh, Saudi Arabia, December 11, 2019.

Ahmed Yosri | Reuters

Energy was the worst-performing sector of the S&P 500 in 2019. But oil is still the fuel of capitalism and depressed prices helped bolster economic activity around the globe.

There’s been a recent uptick in prices, with West Texas Intermediate crude futures trading for more than $60 a barrel, but by historical standards, that’s hardly disruptive.

Despite sluggish energy markets, one of the highlights of 2019 was Saudi Aramco’s initial public stock offering. The oil giant has reached a valuation of $2 trillion, becoming the most valuable company in history.

An ominous sign

In August, investors began parsing the meaning of a rare market phenomena known as the inverted yield curve.

This occurs when short-term interest rates are higher than longer term rates, and it’s often a bad sign for the economy. Historically, when the yield curve inverts, a recession follows within one or two years.

Recession fears indeed swelled as then yield curve inverted. Investors also began to considered a $17 trillion pile of negative-yielding debt from sovereign nations, mostly in Europe. A negative yielding bond would have a yield of less than zero if held to maturity.

As the year progressed, bond markets stabilized and the yield curve that investors had feared finally steepened on optimism that the U.S. economy wouldn’t slow as much as expected and on expectations that the Federal Reserve will hold its benchmark interest rate at its current level, after cutting it three times this year.

The spread between the 2-year and 10-year Treasuries has now widened to the highest level since October, indicating that investors believe the global growth scare has been mitigated by rate cuts from the Fed and other central banks.

Mixed economic data

A General Motors hi-lo driver moves newly assembled engines, used in a variety of GM cars, trucks and crossovers, from final assembly at the GM Romulus Powertrain plant in Romulus, Michigan, August 21, 2019.

Rebecca Cook | Reuters

U.S. manufacturers also sent out warning signs in 2019. The Institute for Supply Management reported that manufacturing activity in the U.S. contracted for the fourth straight month in November. The manufacturing contraction has been a key part of the economic slowdown narrative.

On the other hand, the ISM’s non-manufacturing index continues to expand, meaning the service sector is still running strong.

It seemed whatever negative turns the economic data took in 2019, it was always offset by strong consumer spending and a historically low unemployment rate – currently 3.5 percent.

Tech stocks

Two stocks accounted for nearly 15% of the S&P 500’s gains, according to S&P Dow Jones Indices. Apple was up 85% and Microsoft was up 15%.

The two tech giants are the only two U.S. companies with a market capitalization of more than $1 trillion. And in a cap-weighted index like the S&P, they have an outsized influence.

Facebook, Alphabet (Google’s parent company), and Amazon also contributed.

Semiconductor companies were also big gainers with Advance Micro Devices, Lam Research and KLA Corp. leading the index with the largest gains.

In the end, 2019 enjoyed a confluence of booming technology and easy money from the Fed, and it proved the age-old Wall Street maxim that markets climb a wall of worry — perhaps more than any other year.

Stocks fall slightly, but S&P 500 still on track for 2019 gain of nearly 30%

Stocks opened slightly lower on Tuesday as Wall Street wrapped up a banner year that saw equities surge to record highs, overcoming concerns about the economy and a trade fight with China.

The S&P 500 slid 0.2% while the Nasdaq Composite pulled back 0.3%. The Dow Jones Industrial Average traded 66 points lower, or 0.3%. Energy and tech were the biggest laggards in the S&P 500, sliding 0.6% and 0.4%, respectively. Exxon Mobil was among the worst-performing Dow stocks, falling 0.4%.

The market’s dip came after President Donald Trump tweeted Iran was responsible for an attack on the U.S. embassy in Iraq. Earlier in the day, they pointed to slight gains at the open.

Tuesday’s losses followed market’s worst day since early December. The Dow dropped 183 points, or 0.6% on Monday. The S&P 500 and Nasdaq pulled back 0.5% and 0.6%, respectively.

Still, the major averages remained on track for strong annual gains. The S&P 500 entered Tuesday’s session up 28.5% for 2019, on pace for its biggest one-year gain since 2013, when it rallied 29.6%. The broad index was also within striking distance of its 1997 surge of 31%.

Traders work on the floor at the New York Stock Exchange.

Brendan McDermid | Reuters

“We climbed a wall of worry, from a growth slowdown and profits flat at best, trade concerns, potential impeachment, and high valuations bothering investors — including myself,” said Ned Davis, founder of Ned Davis Research, in a note.

Stocks surged in 2019 despite the ongoing U.S.-China trade war as the Federal Reserve cut rates three times while consumer sentiment remained high. Trade tensions also declined in the fourth quarter after China and the U.S. agreed to sign a so-called phase one trade deal.

“That one’s in the bank,” White House advisor Peter Navarro told CNBC’s “Squawk Box” about the phase-one agreement. “We’re just waiting for the Chinese translation of the 86-page agreement and I’m trying to figure out whether it’s going to be more pages or less in Chinese.”

Trump later said he will sign the agreement on Jan. 15 at the White House.

Apple and Microsoft led the way higher for stocks in 2019, rallying 84.4% and 55.2%, respectively. They are the best-performing Dow stocks of the year and accounted for about 15% of the S&P 500’s overall gains for 2019.

Chipmakers Advanced Micro Devices, Lam Research and KLA Corp. were the best-performing S&P 500 stocks in 2019. AMD and Lam Research both rose more than 100% for the year while KLA surged 99.3%. Retailer Target and fast-casual dining chain Chipotle Mexican Grill also rallied more than 90% this year.

Tuesday also marked the final trading day of the decade. Over the past 10 years, the S&P 500 has surged more than 188%. The broad index’s total return — which includes dividends — tops 255% for the decade.

—CNBC’s Silvia Amaro contributed to this report.

Trump trade advisor Navarro says phase one trade deal is ‘in the bank,’ waiting on translation

Peter Navarro, director of the National Trade Council, speaks during a Bloomberg Television interview outside the White House in Washington, D.C., U.S., on Wednesday, March 28, 2018.

Andrew Harrer | Bloomberg | Getty Images

White House advisor Peter Navarro on Tuesday said the “Phase One” trade deal between the U.S. and China is a certainty at this point, telling CNBC that the accord is “in the bank.”

Asked by “Squawk Box” host Joe Kernen how sure he is over the hotly anticipated agreement, Navarro was upbeat.

“That one’s in the bank, Joe,” he said. “We’re just waiting for the Chinese translation of the 86-page agreement and I’m trying to figure out whether it’s going to be more pages or less in Chinese.”

Navarro, a longtime China trade hawk, refrained from commenting on rumors that the deal could be signed by U.S. and Chinese officials as early as next week, saying he’d prefer to defer to United States Trade Representative Robert Lighthizer on specific timing.

But he did laud the Phase One deal for including provisions proposed earlier in negotiations before a breakdown in talks earlier this year.

“It’s got great stuff in it,” he said. “It’s got essentially the same chapter we had in the May deal that the Chinese walked away from on intellectual property theft. So that’s a good deal.”

“For Wall Street … financial market access for the banks, insurance companies and credit card companies,” he added.

Navarro also alluded to potential trade priorities for the Trump administration in 2020, including a new deal with a post-Brexit United Kingdom and other countries in Europe.

“Next year, 2020, we’re going to try to get something going with Great Britain, Vietnam, Europe and anybody else who wants to fairly trade with the United States of America,” he said.

As one of President Donald Trump’s top trade counselors, Navarro has encouraged the president’s hardline strategies on global trade and efforts to challenge the longstanding multilateral agreements that had come to dominate overseas commerce over the last three decades.

For his part, Trump has attacked U.S. trade deficits as harmful to American manufacturers and farmers, saying that “by the time I finish trade talks, that will change.”

Vivendi sells minority stake in Universal Music to Tencent consortium

A consortium led by Tencent agreed to buy up to 20% of Vivendi’s Universal Music Group (UMG) in a deal that values the world’s largest music label at 30 billion euros ($34 billion) and increases the Chinese company’s clout on the global market.

French media conglomerate Vivendi said it had finalized an agreement to sell an initial 10% of UMG — home to artists such as Taylor Swift, Lady Gaga and The Beatles — to the Tencent consortium. Vivendi added that it had started talks over the possible sale of “an additional minority share for a price which would at least be identical,” without specifying a potential buyer.

Taylor Swift

Christopher Polk | Getty Images

The consortium also had the option to buy on the same price basis up to 10% more of UMG’s share capital by Jan. 15, 2021. The transaction gives a 30 billion euro price tag for UMG on an enterprise value basis.

This initial deal would also soon be followed by a second one allowing Tencent Music Entertainment to buy a minority stake in UMG’s subsidiary that houses its operations in greater China.

The agreement will allow both companies to expand in a recovering global music market, with Tencent getting more access to U.S. artists while UMG can tap into the Asian market, which features big-selling “K-Pop” Korean pop stars.

Tencent did not immediately respond to request for comment, while Vivendi did not disclose the details of the consortium beyond saying they were “global financial investors.”

Bollore cashes in

Vivendi, controlled by French billionaire Vincent Bollore, is seeking to cash in on the music industry’s revival, driven by a growing subscription and ad-based music streaming services.

The tie-up also builds on a partnership struck two years ago, under which Tencent can license Universal’s music for distribution over its streaming platforms.

The long-awaited deal should also boost morale among Chinese deal-makers who have had one of the worst years on record for China-outbound mergers and acquisitions (M&A), with activity plunging to a 10-year low amid trade tensions between the United States and China, Refinitiv data shows.

Vivendi shares edged up 0.3% in early trading, with the final terms of the sale being in line with earlier guidance from Vivendi.

Universal was the main sales growth driver for Vivendi in the third quarter, with its revenues jumping by close to 16% to 1.8 billion euros.